Weekly resin report: Despite robust trading activity, PE prices remain steady overall

The resin markets continued to transact at a swift pace, reports the PlasticsExchange (Chicago) in its weekly Market Update. While prime prices were mostly steady, off-grade values were pressured last week. Once again, both buyers and sellers were serious about dealing, with very little window shopping going on. Transactions were heavily weighted toward polyethylene (PE) over polypropylene (PP); even good volumes of PET, which has been short, changed hands across the PlasticsExchange trading desk.

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Following an uneventful start to July, the high turnover over the past two weeks has already generated results that surpass our full month expectations, writes the PlasticsExchange in its update. While the$0.03/lb PE increase is still floating around, July contracts probably will hold steady. PP contracts should also see very little change. The export market has been heating up, with strong interest seen from Europe and Latin America. Substantial volumes are heading off shore, despite uncertainty surrounding PE tariffs and a drop off in demand from China. (As noted in last week’s resin report, should retaliatory tariffs take hold, material that would normally be exported to China would suddenly become 25% more expensive, thus crushing demand.)

Spot PE trading was very active this past week: Completed volumes were high though prices were mostly steady. The PlasticsExchange benchmark HDPE blowmolding resin was the single prime PE grade that garnered a penny uptick. Low-density (LD) and linear-low-density (LLD) PE film grades were big movers, as well. High-density PE for injection is still well supplied, while LDPE and LLDPE resin for injection are fairly scarce and command a nice premium.

Producers have sometimes been vocal in their attempt to finally implement their old $0.03/lb price increase, but plentiful downgraded prime offers suggest otherwise. There is good overall PE availability, and while export shipments have been growing into record territory, and the pace has been accelerating, new capacity has generally exceeded demand. Consequently, upstream inventories are seemingly burdensome, especially with the threat of tariffs looming. 

The pace of PP trading dropped from the previous week’s fervent pace, but transacted volumes were still a bit above average. Supplies have improved, and while some grades like high-flow CoPP and random clarified are still fairly difficult to source, the material can be found using a bit of elbow grease. The PlasticsExchange reports that its trading floor saw a steady flow of offers. While off-grade has been yielding a larger discount to prime, generic prime PP indices held their levels. Buyers have been acclimated to these heightened prices and it has again become business as usual. Producers have throttled back production a bit to keep the supply/demand balance from tilting negative. With PGP monomer contracts poised to roll (nearly) flat, PlasticsExchange analysts expect to see PP contracts hold around steady this month. 

We are getting deeper into summer and will soon be in the heart of the Gulf hurricane season. It’s an opportune time to recall the massive hurricane-related disruptions and subsequent supply constraints of 2017. As time ticks ahead, the PlasticsExchange suggests keeping an ample inventory of resin on hand as a sensible buffer.

Read the full Market Update on the PlasticsExchange website.